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State Audit Shows CSU Concealed $1.5 Billion in Surplus
By Sentinel News Service
Published June 21, 2019

(File photo)

In a highly critical report, the state auditor found the California State University funneled hundreds of millions of dollars to accounts outside of the state Treasury, disregarded state laws covering transparency and used millions of dollars in revenue from campus parking permit fees to fund projects unrelated to the CSU parking program. The audit also showed that CSU campuses are keeping surplus funds in locally held accounts that are hidden from public view and state oversight.

In addition, as the CSU constructs costly campus parking structures, its leadership has ignored requirements to maintain campus and community committees that promote less-costly alternative transportation programs intended to improve student access, according to the audit, available here: https://www.auditor.ca.gov/reports/2018-127/summary.html

“Unfortunately, the state auditor has again uncovered violations and waste that occur when we allow the CSU to operate its campuses without adequate state oversight or accountability,” said Assemblymember Sharon Quirk-Silva who authored the audit request. “The legislature must enact measures to ensure state funds cannot be hidden in outside accounts and are being spent in the best interests of students.”

According to the audit, investment accounts held by the CSU outside of the state Treasury accumulated a surplus worth $1.5 billion, primarily from tuition. “The Chancellor’s Office did not disclose CSU’s surplus to legislators and students in key documents related to state funding and tuition rates,” according to the audit made public Thursday.

The CSU Employees Union had urged closer scrutiny of the CSU’s outside accounts which were not being used for instruction and program needs. Because these funds lack direct state oversight, little is known about their management or use. Today’s audit says the Chancellor’s Office “has not adopted adequate policies to ensure that the amount of money CSU holds as a reserve and the manner in which it uses that money are appropriate.”

Some key findings from the audit include:

  • CSU used excess student tuition and salary savings to build a $1.5 billion surplus in its operating fund from 2008-9 through 2017-18.
  • The annual cost of tuition for a full‑time CSU undergraduate student increased by about 80 percent, from roughly $3,000 in fiscal year 2008–09 to almost $5,500 in fiscal year 2011–12. Meanwhile, CSU’s operating fund surplus grew by more than 400 percent over the last decade.
  • Campuses often pass the resulting building and maintenance costs on to students, many of whom pay increased sums for parking permits but experience little or no improvement in parking availability.

 

“For years, the CSU has claimed ‘poverty’ and now we find they’ve been holding $1.5 billion in outside accounts. The audit’s findings are disturbing and merit immediate action,” said Neil Jacklin, president of the CSU Employees Union that requested the audit. “This is just the latest example of CSU leadership irresponsibly managing public funds without fear of consequence.”

The audit also reviewed parking program at four CSU campuses: Channel Islands, Fullerton, San Diego, and Sacramento.

According to the audit: “The four campuses we reviewed have built costly parking facilities that have had minimal impact on campus parking capacity while committing the campuses to significant long‑term debt payments.”

The CSU executive leadership has been subject to highly critical state audits in recent years:

CSUEU members want to see the CSU once again be the university that puts students before profit and invests in the front line employees who provide the instructional and support needs of the University.

“I hope our state Legislature takes steps to hold the CSU accountable and strengthen oversight. The practice of hiding state funds and ignoring state laws hurts our students and employees,” said Vicky McLeod, chair of the CSUEU legislative committee.

“Our Skilled Trades Teamsters at CSU are extremely concerned that the CSU may have been earning and saving public funds while understaffing and underpaying dedicated workers. CSU administration has not been transparent with their financial matters and must be held accountable,” said Drew Scott, Skilled Trades Director, Fresno State.

 

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